FinCEN Filing in Massachusetts: Pitfalls for Accountants and Business Owners to Avoid

FinCEN Filing in Massachusetts Pitfalls for Accountants and Business Owners to Avoid

If you’re a business owner in Massachusetts, you need to know about Beneficial Owners Information Reports, or BOIRs. Introduced with the Corporate Transparency Act (CTA), BOI reports are online forms that provide the Financial Crimes Enforcement Network (FinCEN) with key information regarding businesses’ ownership structures. It’s designed to prevent illicit activities like fraudulent shell companies.

Almost all businesses – including LLCs and Corporations – in Massachusetts have to complete BOI reports, and many business owners request aid from their accountants in understanding and filling out these forms. As such, it’s particularly crucial for those in the accountancy field to know how BOIRs work, when their deadlines are, and some of the typical pitfalls to avoid when filing them.

How to File BOI Reports in Massachusetts

You’ll file your BOI report online in Massachusetts (as with every other state around the U.S.) using FinCEN’s online platform. This makes it quick and easy to enter all the data and submit it the same day, without having to worry about the risks of your form getting lost or delayed in the mail. Here’s how to fill it in just three easy steps.

  1. First, identify all beneficial owners of the business you’re reporting for. According to the CTA, “beneficial owners” are any individuals who either directly or indirectly own at least 25% of a company’s equity interests, or have significant influence over the company’s decisions and operations.
  2. Next, gather data for all those identified in Step 1. You’ll need their names, addresses, and even copies of photo IDs for each beneficial owner to submit alongside your BOIR.
  3. Finally, access the FinCEN online e-filing system and complete your report. You have two options for doing this: do it all online in one session or download a PDF from the e-filing platform, fill it in at your own pace, and then submit it online when you’re done.

Typical Pitfalls to Watch For

Typical Pitfalls to Watch For

As touched on earlier, there are numerous common mistakes that people make when it comes to filing their BOI reports. Business owners and those responsible for a lot of BOI reporting – like accountants – should be aware of these pitfalls and take proactive steps to avoid them.

Failing to File on Time

One of the most important things to understand about BOI reports is that they need to be filed before a specific deadline. To be more precise, if your business was created before 2024, you have until January 1, 2025, to file. If your business was made in 2024, you have 90 days from the date of creation to file, and if your business originated in 2025 onward, you have 30 days from the date of formation.

If you don’t file your BOIR on time, you could face grave consequences. There are fines rising to $500 per day for those who don’t file, and even the threat of criminal charges, too, which could bring up to two years of imprisonment and fines of up to $10,000.

How to Avoid This

First, make sure you’re fully aware of the relevant deadline for your business (or the business of your client, if you’re an accountant), based on when the business was formed. Older businesses have more generous deadlines, but those formed from 2025 onwards will only have 30 days to file, so you have to gather all necessary info quickly and file as soon as you can to avoid unnecessary risks.

Not Listing All Beneficial Owners

Without a doubt, one of the most common pitfalls and concerns among business owners in general is not correctly identifying all beneficial owners and listing them on their BOI reports. This mainly stems from the fact that there’s a lot of confusion about what, exactly, classifies someone as a “beneficial owner,” and many business owners have turned to lawyers and accountants to help them understand.

The specifics of beneficial ownership are outlined in the CTA, so it’s wise to read that to understand the term fully. In general, the term refers to anyone who owns 25% or more of a business’s equity interests, as well as anyone who has significant control over the company.

How to Avoid This

To avoid issues with identifying or failing to identify beneficial owners, it’s best to read through the CTA, as discussed above. It’s also wise for business owners to turn to the pros, like accountants, to assist them in figuring out the beneficial owners of their firms, and refrain from submitting any BOIR if you’re not 100% sure that all owners have been listed.

Typos in the Form

This is the kind of issue you can encounter when filling any sort of form, but it’s particularly problematic with BOI reports, as a single typo could cause major confusion with FinCEN. For example, if you enter a beneficial owner’s name or address incorrectly, that may lead to additional questions from FinCEN for you to answer, or even fines if you file too late and then don’t have time to amend your errors.

How to Avoid This

For this, the fix is simple: double-check every form before submitting it. As stated, it’s all online, so you can scan through your form on your computer and check each bit of info before you officially submit. It’s worth having a second pair of eyes – a friend or colleague – to look over it, too, as they may spot something you didn’t. You might also consider using BOIR software, which can alert you to typos or mistakes.

Failing to Provide Accurate Info

The whole point of the BOI report is to provide FinCEN with accurate and detailed data about a business’ ownership structure. This helps to make business ownership, on the whole, more transparent, which, in turn, makes it harder for any illicit activities, like the formation of shell companies or “fronts” for illegal business dealings.

It’s paramount, therefore, that every BOI report is filled out with accurate, up-to-date information regarding all beneficial owners. If you don’t provide the right details, get something wrong, miss something, or otherwise fail to comply with the BOIR rules and guidelines, you could have more headaches later on as you’ll need to reach out to FinCEN, make amendments, and so on.

How to Avoid This

As above, the key here is to be thorough and focused and double-check your form the first time around, so you don’t have to make any changes later on. If you’re an accountant filling out forms for your clients, communicate with them clearly and thoroughly so you know you’ve got all the data you need for a correct BOIR submission.

Again, it also helps to have some BOIR software on your side. That’ll help you minimize your risks of making mistakes even further, and it’ll also help you complete your BOIR much more quickly.

Assuming You Don’t Need to File a BOIR or Being Unaware of Your Obligations

Since BOIRs are quite a new addition to the business landscape, there are a lot of business owners out there who simply aren’t aware of their obligations. In addition, there are many who assume that they don’t need to file their BOIR or incorrectly believe that their business is one of the 23 listed exemptions, excusing them from BOI reporting.

As touched on above, the majority of businesses in Massachusetts do need to file BOIRs. That includes all LLCs, corporations, and various other types of business entities. It’s only very specific sorts of companies that are exempt, like government agencies.

How to Avoid This

Don’t assume you don’t need to file a BOIR – check your obligations and speak with the pros if you’re unsure. There’s a high likelihood you will need to file a report, and if you’re not aware of that obligation, you could end up missing the deadline and facing fines you’re not ready for.

Other Common Mistakes

Other Common Mistakes

Finally, a few more common mistakes and pitfalls:

  • Using your registered agent’s address instead of your main business address. Even if you run a foreign agency with headquarters outside the U.S., you need to add a principal U.S.-based business address on your report.
  • Using P.O. box addresses for beneficial owners. You need to use a full street address for each one, instead.
  • Only reporting your business’ legal name. If it has alternative names, like a DBA (“Doing Business As”) name, you need to include those on the report, as well as the official legal name.
  • Failing to keep records. Make sure to keep copies of all documents, including a confirmation receipt which you should get after submitting your BOIR, just in case there are any disputes later.
  • Assuming that BOIR is a “one and done” event. BOI reporting is continuous. If your company’s ownership structure changes, you need to report that to FinCEN, within 30 days of the change occurring.

Avoid Mistakes in Your BOI Report

Whether you’re filing a BOIR for your own business or helping a client with their report, it’s vital to get it right the first time. Be cautious, prudent, and attentive to avoid the pitfalls listed above, and consider investing in helpful BOIR software that can make the process much easier and more reliable.

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Is your Company Exempt from Filing BOI Report?

There are certain conditions under which companies are allowed exemption from filing BOI reports. Our exemption checking tool will help you find whether or not your company qualifies for it.